Primary surge continues with Goldman, Comcast, EIB; ConocoPhillips firms; Shell, PepsiCo soft

By Aleesia Forni and Cristal Cody

Virginia Beach, May 19 – Goldman Sachs Group Inc., Volkswagen Group of America Finance LLC, European Investment Bank and Comcast Corp. were among those pricing bonds during another onslaught of issuance for the investment-grade primary market.

Even with the staggering $41 billion of new issuance priced so far this week, most new deals on Tuesday were met with strong investor demand.

Comcast sold all four tranches of its new offering between 10 basis points to 15 bps tight of initial price talk and garnered around $10 billion of orders for the deal.

Columbia Pipeline Group Inc. also saw a solid order book that was more than five times oversubscribed for its debut $2.75 billion offering.

However, new deals from South Carolina Electric & Gas Co. and Skandinaviska Enskilda Banken AB were both forced to price their respective new issues wide of initial price thoughts.

Meanwhile, the forward calendar grew on Tuesday, with Kommuninvest i Sverige AB, Japan Bank for International Cooperation and Export Development Canada each setting price talk for planned bond offerings.

New investment-grade bonds were mixed in secondary trading following the strong deal calendar over the day, according to market sources.

ConocoPhillips Co.’s senior notes (A1/A/) traded 1 bp to 2 bps tighter.

Shell International Finance BV’s 2.125% notes due 2020 widened 5 bps.

PepsiCo Inc.’s 2.75% senior notes due 2025 traded 3 bps softer over the day.

The Markit CDX North American Investment Grade series 23 index was unchanged at a spread of 63 bps.

The CDX index has a 12-month high spread of 76.4 bps and a 12-month low spread of 59.4 bps, according to a Barclays Bank plc report on Tuesday.

Goldman senior, sub notes

Goldman Sachs Group priced a combined $5 billion of notes in three parts on Tuesday, according to a market source.

There was $750 million of two-year floating-rate senior notes (Baa1/A-/A) that priced at par to yield Libor plus 67 bps.

A $2.25 billion tranche of 3.75% 10-year senior notes (Baa1/A-/A) sold at 99.678 to yield 3.789%, or 150 bps over Treasuries.

Finally, the company sold $2 billion of 5.15% subordinated notes (Baa2/BBB+/A-) due May 22, 2045 at Treasuries plus 210 bps. Pricing was at 99.35 to yield 5.193%.

Goldman Sachs & Co. is the bookrunner.

The financial services company is based in New York City.

Comcast three-parter

Elsewhere on Tuesday, Comcast sold $4 billion of senior notes (A3/A-/A-) in three tranches, according to informed sources.

A $1.5 billion tranche of 3.375% notes due 2025 sold at 99.875 to yield 3.39%, or Treasuries plus 110 bps.

Pricing was on top of guidance, which had tightened from initial guidance set in the Treasuries plus 120 bps to 125 bps range.

The company also sold $800 million of 4.4% notes due 2035 at 99.939 to yield 4.405%, or Treasuries plus 130 bps.

The notes sold on top of guidance. Initial talk was set in the range of Treasuries plus 140 bps to 145 bps.

Finally, $1.7 billion of 4.6% notes due 2045 sold at 99.925 to yield 4.605%.

Pricing was on top of talk with a spread of Treasuries plus 150 bps.

The notes were initially talked at Treasuries plus 160 bps to 165 bps.

Proceeds will be used for general corporate purposes and working capital.

The active bookrunners were Citigroup Global Markets Inc., Goldman Sachs and Morgan Stanley & Co. LLC. Deutsche Bank Securities Inc., SMBC Nikko and UBS Securities LLC were the passive bookrunners.

Comcast is a Philadelphia-based provider of entertainment, information and communication products and services.

EIB brings $3 billion

The European Investment Bank priced on Tuesday $3 billion of 1.125% three-year global notes (Aaa/AAA/AAA) at mid-swaps minus 7 bps, according to a market source.

The notes sold in line with talk.

BofA Merrill Lynch, BNP Paribas Securities Corp. and J.P. Morgan Securities LLC are the bookrunners.

The lender for the European Union is based in Kirchberg, Luxembourg.

Columbia Pipeline debut offer

In its first entry into the high-grade primary, Columbia Pipeline Group sold $2.75 billion of senior notes (Baa2/BBB-/BBB-) on Tuesday in four tranches, according to a market source.

The issuer brought to market $500 million of 2.45% three-year notes with a spread of Treasuries plus 145 bps. Pricing was at 99.976 to yield 2.458%.

There was a $750 million tranche of 3.3% five-year notes priced at 99.82 to yield 3.339%, or Treasuries plus 175 bps.

Also priced was $1 billion of 4.5% 10-year notes with a spread of 225 bps over Treasuries. The issue sold at 99.847 to yield 4.519%.

Finally, $500 million of 5.8% notes due 2045 sold at 99.772 to yield 5.816%, or Treasuries plus 275 bps.

All four tranches sold at the tight end of guidance.

The notes were offered via Rule 144A and Regulation S.

Proceeds will be used to pay off $1,025,200,000 of intercompany debt between Columbia Pipeline and its wholly owned subsidiary, NiSource Inc., and to fund a $1.45 billion special dividend to NiSource in connection with its separation from the company. Any remaining proceeds will be used for general corporate purposes.

JPMorgan, MUFG and Scotia Capital (USA) Inc. are the active bookrunners. Passive bookrunners are Credit Suisse Securities, Mizuho Securities and RBC Capital Markets LLC.

The notes will be guaranteed by the company’s subsidiaries.

The Houston-based company owns and operates natural gas pipelines.

Volkswagen offering

Volkswagen Group of America Finance sold a $2.8 billion issue of notes (A2/A/) on Tuesday in four tranches, according to a market source.

The issuer priced $750 million of floating-rate notes due Nov. 22, 2016 at par to yield Libor plus 28 bps.

A $1 billion 1.65% note due May 22, 2018 sold at 99.875 to yield 1.693%, or Treasuries plus 68 bps, while $300 million of floating-rate notes due May 22, 2018 sold at par to yield Libor plus 47 bps.

A $750 million tranche of 2.4% notes due May 22, 2020 priced at 99.855 to yield 2.431%, or Treasuries plus 83 bps.

Bookrunners for the Rule 144A and Regulation S deal are Citigroup Global Markets, Goldman Sachs, Morgan Stanley and Societe Generale.

Proceeds will be used for general corporate purposes.

The company is a subsidiary of Volkswagen AG, a Wolfsburg, Germany-based automaker.

Fiserv prices tight

Fiserv, Inc. priced a $1.75 billion two-part offering of senior notes (Baa2/BBB/) on Tuesday in tranches due 2020 and 2025, according to an informed source and an FWP filing with the Securities and Exchange Commission.

The company issued $850 million of 2.7% five-year notes at 99.832 to yield 2.736%, or Treasuries plus 115 bps.

The notes sold at the tight end of the Treasuries plus 120 bps area guidance, tightened from initial talk set in the Treasuries plus 125 bps area.

There was also $900 million of 3.85% 10-year notes priced at Treasuries plus 160 bps. The notes were issued at a price of 99.933 to yield 3.858%.

Guidance was set in the Treasuries plus 165 bps area after having tightened from the Treasuries plus 170 bps area talk.

The bookrunners are BofA Merrill Lynch, Wells Fargo Securities LLC, MUFG, U.S. Bancorp Investments Inc., SunTrust Robinson Humphrey Inc., PNC Capital Markets LLC and JPMorgan.

Proceeds will be used to redeem the company’s $600 million of 3.125% senior notes due 2016 and $500 million of 6.8% senior notes due 2017 and to repay outstanding debt under a revolving credit facility.

Any remaining net proceeds will be used for general corporate purposes.

The financial services technology company is based in Brookfield, Wis.

ANZ covered bond

In other new issue activity on Tuesday, ANZ Banking Group Ltd. priced a $1.25 billion 2.05% five-year covered bond with a spread of mid-swaps plus 37 bps, a market source said.

The issue (Aaa/AAA/) sold at 99.854 to yield 2.081%.

ANZ, Goldman Sachs, HSBC Securities and RBC Capital Markets are managing the Rule 144A sale.

The financial services company is based in Melbourne, Australia.

SEB prices wide

Skandinaviska Enskilda Banken priced a $1 billion issue of 2.45% notes due 2020 on Tuesday at Treasuries plus 90 bps, an informed source said.

Pricing was wide of initial guidance set in the high-80 bps area over Treasuries.

The notes (A1/A+/A+) priced at 99.846 to yield 2.483%.

The bookrunners are BofA Merrill Lynch, Barclays, Deutsche Bank Securities and Morgan Stanley.

Proceeds will be used for general corporate purposes.

The financial services company is based in Stockholm.

SCE&G upsizes

South Carolina Electric & Gas priced an upsized $500 million of 5.1% first mortgage bonds due June 1, 2065 on Tuesday, according to an informed source and an FWP filed with the SEC.

The notes (A3/A/A-) were upsized from $400 million and priced at 99.193 to yield 5.145%.

Pricing was at the wide end of initial talk.

BofA Merrill Lynch, Credit Suisse Securities, Mizuho Securities, Morgan Stanley and UBS Securities were the joint bookrunners.

The Columbia, S.C.-based company will use the proceeds to repay short-term debt, to finance capital expenditures and for general corporate purposes.

SCE&G is the principal subsidiary of Scana Corp., an energy-based holding company.

Kommuninvest sets talk

Kommuninvest set price talk for a planned $300 million four-year offering of notes (Aaa/AAA/AAA) in the Libor plus 3 bps area, an informed source said.

The deal is expected to price on Wednesday.

Citigroup Global Markets, Goldman Sachs and RBS Securities Inc. are the bookrunners for the Rule 144A and Regulation S deal.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

JBIC on deck

Japan Bank for International Cooperation also set price talk for a benchmark two-part offering of guaranteed bonds (A1/AA-/) on Tuesday, according to a market source and a 424B5 filed with the SEC.

The sale includes five-year notes talked in the mid-swaps plus high-teens bps area and 10-year notes talked in the mid-swaps plus high-20 bps area.

The notes will be guaranteed by Japan.

Barclays, Citigroup Global Markets, HSBC Securities (USA) Inc. and JPMorgan are the joint bookrunners.

Proceeds will be used for the bank’s financing operations.

The financial institution is based in Tokyo.

EDC plans offering

Also on Tuesday, Export Development Canada announced plans to price a $1 billion offering of notes (Aaa/AAA/) due 2018, setting price talk in the mid-swaps minus 8 bps area, according to a market source.

CIBC World Markets Corp., Credit Suisse Securities, Goldman Sachs and RBC Capital Markets are the joint bookrunners.

The government-backed agency for exporters is based in Ottawa.

ConocoPhillips firms

In the secondary market, ConocoPhillips’ 2.2% notes due 2020 firmed 1 bp to 60 bps bid on Tuesday, a source said.

The issue priced on May 13 in a $500 million offering at 65 bps plus Treasuries.

The company’s 3.35% notes due 2025 tightened 2 bps to 105 bps bid, according to the market source.

ConocoPhillips sold $500 million of the 10-year notes in the May 13 offering at Treasuries plus 110 bps.

The energy company is based in Houston.

Shell eases

Shell International Finance’s 2.125% notes due 2020 widened 5 bps to 57 bps bid in trading, a source said.

Shell sold $2 billion of the five-year notes (A1/AA/) on May 6 at a spread of Treasuries plus 60 bps.

The company is a subsidiary of the Hague, the Netherlands-based Royal Dutch Shell plc.

PepsiCo weaker

PepsiCo’s 2.75% notes due 2025 eased 3 bps to 90 bps bid on Tuesday, according to a market source.

The company sold $1 billion of the 10-year notes (A1/A-/A) at a spread of Treasuries plus 87 bps on April 27.

PepsiCo is a Purchase, N.Y.-based global food and beverage company.

Bank/brokerage CDS costs flat

Investment-grade bank and brokerage CDS prices were again flat on Tuesday, according to a market source.

Bank of America Corp.’s CDS costs were unchanged at 65 bps bid, 68 bps offered. Citigroup Inc.’s CDS costs were also unchanged at 74 bps bid, 77 bps offered. JPMorgan Chase & Co.’s CDS costs remained at 63 bps bid, 66 bps offered. Wells Fargo & Co.’s CDS costs were flat at 44 bps bid, 47 bps offered.

Merrill Lynch’s CDS costs were unchanged at 68 bps bid, 72 bps offered. Morgan Stanley’s CDS costs were also flat at 79 bps bid, 82 bps offered. Goldman Sachs Group’s CDS costs were unchanged at 83 bps bid, 86 bps offered.

Stephanie N. Rotondo contributed to this review.

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